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EU Divided Over Response to Trump’s Tariff Threats
While the European Union presents a united front against U.S. President Donald Trump’s newly announced tariffs on steel and aluminum, internal divisions are emerging over the best course of action. Some member states, led by France, are pushing for swift retaliatory measures, while others, including Germany, Italy, and Hungary, advocate for a more cautious approach focused on dialogue.
Trump’s Tariffs Spark Urgent EU Talks
Trump’s latest tariff decision, announced Monday, includes a 25% levy on imported steel and aluminum, citing national security concerns. The executive order, set to take effect on March 12, was followed by another announcement on Thursday: a plan for reciprocal tariffs on U.S. trading partners, to be determined on a country-by-country basis in the coming weeks.
In response, the European Commission vowed on Friday to react “firmly and immediately”, setting the stage for internal debate within the EU over how to proceed.
Hawks vs. Doves: A Divided Approach
Following an emergency video conference of EU trade ministers on Wednesday, the rift between hawks and doves became apparent.
- France, leading the hawkish camp, argues that strong and immediate retaliation is necessary to prevent excessive concessions to the U.S. “Every U.S. measure announced calls for an immediate response,” one official told Euronews.
- Germany, Italy, and Hungary, in contrast, prefer a more measured approach, advocating for continued negotiations with Washington rather than hastily imposing countermeasures. A diplomat from this group emphasized the importance of avoiding a tit-for-tat trade war.
Hungary, where Prime Minister Viktor Orbán maintains close ties with Trump, is pushing for no retaliatory action before March 12. Meanwhile, Italy insists on keeping diplomatic channels open before resorting to tariffs.
EU’s History of Retaliation and Future Strategy
The EU has previously responded to Trump-era tariffs. In 2018, the bloc countered U.S. duties on European steel (25%) and aluminum (10%) with €2.8 billion in tariffs on American goods. A temporary truce was brokered under President Joe Biden, but that agreement expires at the end of March 2024.
Since then, the EU has bolstered its trade defenses, introducing anti-coercion measures that allow restrictions on public procurement, services, and intellectual property rights in retaliation to trade threats.
Strengthening Global Trade Partnerships
Amid tensions with the U.S., the EU is working to expand its global trade network. Recent agreements include:
- A free trade deal with Mercosur nations (Argentina, Brazil, Paraguay, Uruguay)
- A trade pact with Switzerland, finalized in December
- A renewed agreement with Mexico, completed in January
- Reopened negotiations with Malaysia
Later this month, all EU Commissioners will travel to India for talks on a strategic partnership, including discussions on trade cooperation.
Outlook: Trade Tensions or Compromise?
With Trump signaling broader trade policy changes, EU officials, including Trade Commissioner Maroš Šefčovič, have warned that the bloc must prepare for more than just steel and aluminum tariffs.
Following a meeting with Canadian Prime Minister Justin Trudeau, European Council President António Costa reinforced the EU’s preference for diplomacy, tweeting: “Trade agreements are better than trade tariffs.”
Whether the EU opts for immediate retaliation or ongoing negotiations, its ability to maintain a cohesive response will be crucial in shaping its economic future amid a shifting global trade landscape.
News
Iran Says Hormuz Can Reopen Within Seven Days as Oil Exports Come Under Pressure
Iran’s military said it retained full control of the Strait of Hormuz on Monday, while Foreign Minister Abbas Araghchi said the strategic waterway could be fully reopened within seven days if Tehran’s conditions were met and hostile measures against the country were lifted.
The statements came as Iran faced growing economic pressure, with the rial falling to record lows, Oil Minister Mohsen Paknejad resigning and the United States claiming that Tehran had not loaded any crude onto tankers during September.
Brigadier General Aziz Jafari, commander of Iran’s Khatam al-Anbiya Joint Air Defence Headquarters, said all movements through the Strait remained under the control of the Iranian armed forces despite changes in US tactics.
“All movements (in Hormuz) are under the control of the armed forces of the Islamic Republic,” Jafari said.
US Treasury Secretary Scott Bessent said on Thursday that Iran had not loaded crude oil onto tankers during September, arguing that the Trump administration was targeting Tehran’s main source of revenue.
Iranian President Masoud Pezeshkian acknowledged in August that restrictions were disrupting oil exports, saying the country had previously been able to sell oil but was now unable to do so at the same level.
Paknejad’s resignation was officially attributed to family and personal matters. However, his departure came amid speculation about the impact of reduced oil exports on government finances. Before his resignation was announced, Paknejad said in a video carried by Iranian media that revenue from oil already sold would be collected and that the process would continue.
The acting oil minister has pledged to maximise production and maintain exports through new strategies.
Despite pressure on Iranian exports, oil shipments from other parts of the region remained high. Ship-tracking company Kpler estimated crude exports from the region excluding Iran at between 19.5 million and 22.5 million barrels per day during the final week of September, compared with a pre-war regional average of about 18 million barrels per day.
Iran’s currency has also come under severe pressure. The euro rose above 300,000 tomans on the informal market, while the US dollar reached 270,000 tomans, more than double its level of about 135,000 tomans at the beginning of the year. One toman is equal to 10 rials.
The UK Maritime Trade Operations agency reported at least one attack each day in the Strait of Hormuz or the Gulf of Aden since October 2.
Araghchi told foreign ambassadors in Tehran that the conflict could not be resolved militarily and called for negotiations based on fairness. He warned that any renewed military confrontation would trigger a stronger Iranian response.
Parliament Speaker Mohammad Bagher Ghalibaf said Tehran had received US proposals through intermediaries but rejected what he described as one-sided demands.
He said the Strait would remain closed until Iran’s seven conditions, based on the Islamabad memorandum, were met.
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